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Fed Lowers Rate by 50 Basis Points, Surprises Market with Dovish Projections – Impact on Bitcoin (BTC)
Bitcoin (BTC) experienced volatile yet positive price movements on Wednesday following the Federal Reserve’s decision to reduce rates in the US by 50 basis points to a range of 4.75-5.0%, while indicating a greater degree of interest rate reductions than the market had expected for 2025, as reflected in its updated dot-plot.
FOMC Reduces Rates By 50Bps; Target Range Stands At 4.75% – 5.00%
– Reduced Interest On Reserves Balances By 50Bps To 4.90%$DXY $USDJPY #FOMC— LiveSquawk (@LiveSquawk) September 18, 2024
Following the Fed’s rate cut announcement, Bitcoin’s price fluctuated between $60,000 and $61,000.
Prior to this week’s meeting, there was a division on Wall Street regarding whether the Fed would implement a rate cut for the first time since 2020 by either 25 or 50 basis points.
Thus, the choice to proceed with a more substantial 50 basis point reduction to the federal funds rate target range likely surprised some market observers.
However, this was not the only dovish element of the policy announcement.
The Fed’s dot-plot, which illustrates the interest rate projections of its members, indicated that the median Fed policymaker anticipates an additional 150 basis points in rate cuts by the conclusion of 2025.
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Fed reduces rates by 50bps and indicates further cuts ahead. The dot plot suggests the funds rate will decrease to 4.25-4.5% this year, implying either one more 50bp reduction or two 25bp cuts in the remaining meetings this year. An additional 100bps of cuts is expected for next year. pic.twitter.com/n6EiGpnnhU
— Colby Smith (@colbyLsmith) September 18, 2024
New economic forecasts were also published. The Fed anticipates that inflation will continue to decline towards 2.0% and that the unemployment rate will stabilize around its current level through 2026.
Attention will now shift to Fed Chair Jerome Powell, who is set to hold a press conference shortly to elaborate on the policy decision.
However, the conditions for a Fed-driven rally in cryptocurrency markets seem to be aligning.
The Fed appears determined to significantly lower interest rates while maintaining a positive outlook on the economy.
Provided that fears of a US recession do not resurface dramatically, the groundwork may be laid for BTC to approach $70,000.
Moreover, Fed rate cuts reduce the risk of recession.
The post Fed Cuts Rate by 50bps, Surprises Market With Dovish Dot-Plot – Here’s How Bitcoin (BTC) Reacted appeared first on Cryptonews.
